\u3000\u3 Shengda Resources Co.Ltd(000603) 236 Quectel Wireless Solutions Co.Ltd(603236) )
Key elements of the report:
On the evening of April 15, 2022, the company released its 2021 annual report. The annual revenue of the company was RMB 11.26 billion (YoY + 84.5%), and the net profit attributable to the parent company was RMB 360 million (YoY + 89.4%). Among them, Q4 achieved a revenue of 3.79 billion yuan (YoY + 99.5%) and a net profit attributable to the parent company of 120 million yuan (YoY + 89.2%). The performance is basically in line with expectations.
Overseas business continued to expand, and the scale effect led to the decline of expense rate: thanks to the growth of the company’s export channels, perfect supply chain and strong delivery capacity, the company’s overseas business grew rapidly in 2021. The annual overseas operating revenue was 4.97 billion yuan, a year-on-year increase of 113.27%. At the same time, as the gross profit margin of overseas market is higher than that of China, the proportion of overseas business of the company has increased, which has alleviated the downward pressure of gross profit margin to a certain extent. In terms of profit margin, due to the rise of raw material prices in 2021, the company’s annual gross profit margin decreased to 17.6% (-2.7pct). However, the reduction of the company’s expense rate has alleviated the adverse impact of the decline of gross profit margin on the company to a certain extent. The annual sales / management / R & D / financial expense rates of the company were 3.20%, 2.36%, 9.08% and – 0.11% respectively, with changes of -0.04pct / – 0.65pct / – 2.49pct/0.55% PCT respectively. The four expense rates decreased by 2.63pct year-on-year, highlighting the scale effect.
The intelligent manufacturing center has been put into operation, and the trend of cost reduction and efficiency increase is obvious. In China, the company has set up two self owned intelligent manufacturing centers in Changzhou and Hefei. Among them, Hefei intelligent manufacturing center has 10 production lines and 2 R & D pilot production lines, with an annual output of 45 million pieces; Changzhou intelligent manufacturing center has also completed the erection of 15 wireless communication module patch production lines. It is expected to complete the erection of another 5 production lines in 2022, with a production capacity of 90 million pieces / year. Globally, the company has established OEM cooperation in Malaysia, Brazil, Suzhou, Dongguan, Jiaxing and other places to ensure stable supply of production capacity in an all-round way. In addition, the company has upgraded some automatic production and testing lines to improve the efficiency of the production line to better meet the needs of customers, which also brings space for the improvement of gross profit margin.
The leading position is stable, and the high outlook of the Internet of things module market continues: according to the latest global cellular Internet of things module market analysis report of counterpoint, the global cellular Internet of things module revenue in Q4 in 2021 increased by 58% year-on-year, of which Quectel Wireless Solutions Co.Ltd(603236) accounted for 26.6% of the total market sales, 19 percentage points higher than the second telit, and the leading position is stable. In terms of module system, 5g module has the fastest growth in the global market, with a year-on-year increase of 324%. Among them, router / CPE, PC and industry are the primary applications of 5g technology; Followed by 4gcat1, with a year-on-year increase of 105%. In terms of application fields, automobile, router / CPE, industry, PC and POS are the top five revenue applications of cellular Internet of things Quectel Wireless Solutions Co.Ltd(603236) in recent years, it has continuously invested heavily in research and development, improved the product matrix, and made significant breakthroughs in 5g, vehicle module, intelligent security, gateway, wireless payment, notebook computer and other fields. In the future, the relevant performance is expected to grow rapidly with the improvement of the prosperity of the industry. In addition, the company also continues to broaden the industrial chain, and has made great breakthroughs in the digital integration business of antenna, cloud platform, ODM and smart city. On the basis of the high outlook of the industry, the new business expansion will further broaden the company’s growth space and thicken the company’s profits.
Profit forecast and investment suggestions: we believe that under the environment of high vision of the Internet of things, the company is expected to maintain high-quality and rapid growth by virtue of its advantages in the whole field of the Internet of things module. We estimate that the company’s operating revenue from 2022 to 2024 will be 15.571208.5828816 billion yuan, the corresponding net profit attributable to the parent company will be 5.56/9.731432 billion yuan, and the corresponding closing price of PE on April 15 will be 145.05 yuan, 38x / 22x / 15x, maintaining the “buy” rating.
Risk factors: intensified competition in the communication module market and shortage of upstream chips or other components.
